The PAP, in control since before independence, was jolted when it got an all-time low of 60 per cent of all votes cast and the opposition grabbed an unprecedented six seats in the 87-member parliament. The PAP holds the rest.
"Some voters will certainly treat the by-election as a referendum on the PAP government's policies and actions since May 2011," said political observer Eugene Tan, a law professor at the Singapore Management University.
Issues in last year's election like immigration, the cost of living, a growing income gap, high salaries of cabinet ministers and overcrowding in public transport have not gone away, Tan told AFP.
After last year's vote, the government stepped up the construction of public-housing flats, budgeted hundreds of millions of dollars to upgrade public transport, and reduced the intake of foreign workers.
Cabinet ministers also took a pay cut but they remain the highest-paid politicians in the world, with the prime minister still getting a basic annual salary of Sg$2.2 million.
Singapore says the high salaries are designed to deter corruption and attract talented people from the private sector.
The Hougang seat was left vacant in February after the opposition Workers' Party sacked its MP over allegations of extramarital affairs, giving the PAP an opportunity to redeem itself if it takes the seat.
Prime Minister Lee Hsien Loong is now putting his reputation on the line in Hougang by campaigning all-out for his party's candidate, Desmond Choo, 34, who is fighting the Workers' Party's Png Eng Huat, 50.
Apart from national issues, many Hougang residents are angry at the PAP's policy of putting opposition wards at the back of the queue for upgrades of public-housing estates, where more than 80 per cent of Singaporeans live.
Hougang is a lot scruffier than neighbouring PAP-controlled wards, which receive priority for facelifts and other improvements that boost property values.
"People are asking why don't we get all this upgrading despite all the other constituencies getting it?" said Hougang resident Justin Zhuang, 28.
"It is very real that there is not much development here, and it feels very different," Zhuang said.
Hougang lies next to Ang Mo Kio, the prime minister's constituency, which has manicured parks, fitness corners, sheltered walkways, cycling tracks and playgrounds at every turn.
Such amenities are few and far between in Hougang, which is separated from Ang Mo Kio by a six-lane road.
For 53-year-old voter Lim Boon Kiat, the prospect of a new-look Hougang under the PAP is tempting.
"How long Hougang will be like this? Maybe we need to change and see if it is better on the other side," he said.
Whether a majority of Hougang voters will succumb remains to be seen. There are no published opinion polls in Singapore and public debate is largely vented online.
Before the May 2011 election, founding leader Lee Kuan Yew -- Prime Minister Lee's father -- warned voters in multi-seat Aljunied, bordering Hougang, against voting for the Workers' Party because their property values would fall.
But residents still voted five opposition members into parliament to represent Aljunied over a PAP team led by Foreign Minister George Yeo, the first cabinet member to lose an election in Singapore.